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Under section 2 (68) of company act, 2013 Private company mean company incorporated under company’s act 2013 having paid-up share capital as may be prescribed, and which by its articles, —
A. Restricts the right to transfer its shares:
B. The maximum number of shareholders is restricted to 200 in case of a Private Limited Company. The following should not be counted as shareholders of the Company:
i. A person who or was is in the employment of the company shall not be counted
ii. a shareholder who was previously in the employment of the Company shall not be counted
C. Prohibits any invitation to the public to subscribe for any securities of the company
It is a form of business which is came into existence through the Companies Act, 2013 and has separate legal entity from that of its promoter. One of the distinctive features of a Private limited is that the financial liability of a shareholder is limited to the value of their shares.
Out of total business incorporations in India, 93% are in the form of a private limited company, because of its easy to form and easy to dissolve and has less compliance as per the provision of law as compared to a public limited or listed company.
Advantages
➲ Lesser Income Tax
A Private Limited Company enjoys a reduced tax bracket of 15% in Manufacturing business and only 22% for other businesses. Earlier the rate of income tax used to be 30% plust applicable cess but the Government of India has reduced the rates of Income Tax applicable on Companies in accordance with the Ease of Doing Business in India initiative.
➲ Distinct Identity
An entity means something that has a true existence; an object with a distinct existence. A company is a legal entity and a legal entity established under the Law. Hence a company is a form of the organization having broad legal potential and that may own property and also incur debts in its own name. The members of the company have no liability towards company debts because the company and members both are separate people in the eye of the law, hence company is an artificial person having a separate legal identity.
➲ Liability is Limited
Limited Liability means the status of being legally responsible for a company's debts only to a limited sum. Like proprietorships and partnerships, the Member's responsibility for the company's debts is limited in a limited liability company. In other words, the responsibility of a company's members is limited only to the sum of the face value of the shares they take over.
➲ Acquiring property
A company may buy, possess, enjoy and alienate property under its own name, becoming a legal individual. No shareholder can claim the company's property as long as the company is a company. The shareholders are not the actual owners of the company. The company itself is the real proprietor.
➲ Capacity to sue and be sued in its own name
To sue means initiating legal action against or putting a suit before a court of law. Just like one person in the name of another person can bring legal action against another in his / her own name, a company being an independent legal entity can sue and be sued in his / her own name too.
➲ Perpetual Succession
The private limited company, being a separate legal entity in the eyes of law, is known by its name. Thus, director/member cessation/death does not affect the Private Limited Company's existence. Members may come and members will leave but the company goes forever.
➲ Easy Funding
A private limited company can raise funds from its member after issuing shares to them or issuing debt securities to them. And the private limited company has the opportunity to convert itself into public limited after which it can raise money from the general public at large after listing its shares in the stock exchange and taking IPO in the market.
➲ Business credibility
If a business is established as a proprietorship or partnership, it is not registered with the Ministry of Corporate Affairs and can not be found in the databases of the online company or LLP. Often there is no reliable evidence of the existence of the company, making it difficult to open a bank account, acquire trustworthy clients, or receive credit from vendors.
➲ Easy entry & Exit
A private limited company is an easy way to get into the corporate market, only you need to get register your form of the company under the ministry of corporate affairs and obtain the certificate of incorporation and it has an easy existed option too if you want to shut down your business you only need to inform to ministry through required form and you take exist legally after settling your liability.
➲ No Minimum Capital Required
As per the point of view of incorporation, there is no minimum capital required for incorporating a private limited company. As per company law 2013 you can start a private limited company with 0 paid-up capital.
Disadvantages:
➲ Prohibition on the invitation of the public for investment
A private limited company can not invite the public at large for making the investment in the company, apart from its member no person is allowed to make the investment in the company. It is prohibited from company law 2013.
➲ Transferability of shares
In a private limited company person, a shareholder cannot transfer its share to the general public (non-member) unless it is approved by the board of the company. Under the private limited company, the share firstly transfers to its member if they refuse to accept then only it can be transferred to the third person, this restriction is imposed by law.
➲ Lesser Income Tax
One of the most attractive features of a Private Limited Company is that enjoys a reduced tax bracket of 15% in Manufacturing business and only 22% for other businesses. Earlier the rate of income tax used to be 30% plust applicable cess but the Government of India has reduced the rates of Income Tax applicable on Companies in accordance with the Ease of Doing Business in India initiative.
➲ Easy to jump into a corporate world
Private Limited Company form of business is an easy and simple way to get into the corporate world and it is an easy way for a good start-up. As compare to Sole Proprietorship, it is a better option for the start-up as in this form of business liability of the member is limited. It is a good platform for incorporating a company form of business having ownership.
➲ Business credibility
If a business is established as a proprietorship or partnership, it is not registered with the Ministry of Corporate Affairs and cannot be found in the databases of the online company or LLP. Often there is no reliable evidence of the existence of the company, making it difficult to open a bank account, acquire trustworthy clients, or receive credit from vendors.
➲ No Minimum Capital Required
As per the point of view of incorporation, there is no minimum capital required for incorporating a private limited company. As per company law 2013, you can start a private limited company with "0" paid-up capital. Whereas if you want to incorporate a public limited company you need to have 5 Lakh as minimum paid-up capital
➲ Liability is Limited
Limited Liability means the status of being legally responsible for a company's debts only to a limited sum. Like proprietorships and partnerships, the Member's responsibility for the company's debts is limited in a limited liability company. In other words, the responsibility of a company's members is limited only to the sum of the face value of the shares they take over.
Private Limited Company incorporations process:
STEP 1: APPLY FOR THE DESIRED NAME
The first step in incorporating a company is for reserving the name of the proposed company in part-A of SPICe Plus (SPICe+) form. In this form choose your business activity and file for two proposed names, if CRC will reject the proposed name then file again with two new names within a certain time limit from the date of rejection (15 days).
STEP 2: APPLY FOR A DIGITAL SIGNATURE CERTIFICATE (DSC)
The process of incorporation of a Company is 100 per cent online in India. Hence, we need to apply for a DSC (Digital Signature Certificate), which will be used for electronically signing the forms by proposed directors and proposed members respectively. DSC has to be mandatorily applied for each and every single member/shareholder and director of the Company.
STEP 3: FILL THE APPLICATION FOR INCORPORATION (SPICe plus Form - SPICe+)
Once, your name gets reserved under it will be valid for 20 days from the date of approval, within 20 days you have to fill-up the respective application form for incorporation along with all the requisite attachments and documents and upload it online. SPICe+ is an advanced form combination of 8 forms in one. Through this proposed company can apply for at once:
1. Name reservation
2. Incorporation
3. Directors Identification Number
4. TAN
5. PAN
6. EPFO
7. ESIC
8. GSTIN
Next step is to fill the Part-B of SPICe + which will contain all the detail related to incorporating company like number total number of directors and members, Authorized share capital, paid-up capital, number of share hold by members, company registered address detail, directors and member detail and will required attachments for proof. Then draft the MOA (memorandum of association) and AOA (Article of Association) of the proposed company, then fill form required for EPFO and ESIC registration with detail, then Fill the AGILE form for procuring GSTIN. After filling all these attach the signature and then upload it on the MCA website.
STEP 4: CERTIFICATE OF COMMENCEMENT OF BUSINESS
Once the application of incorporation of the company is approved and the Certificate of Incorporation is issued by the ROC, the Company shall file for seeking approval for commencing the business within 180 from the date of incorporation of the Company.
A. ID proof of proposed Directors and members:
i. PAN card (Mandatory)
ii. Aadhar card (Mandatory)
iii. Photograph of the proposed director (mandatory)
iv. Passport or Voter’s ID or Driving License
B. Address proof of proposed members and directors (any one of the following):
i. Telephone bill
ii. Mobile Bill
iii. Bank statement
iv. Electricity bill
C. Address proof for the principal place of business of the proposed company (any one of the following)
i. Utility bill like telephone bill, electricity bill, gas bill, water bill
ii. Rent agreement with rent slip
iii. Proof of ownership
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COMPLIANCE CALENDAR FOR COMPANIES ACT, 2013 |
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S. No |
FORM |
PURPOSE |
TIMELINE |
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1. |
MSME Form I |
Companies who get supplies of goods or services from micro and small enterprises and whose payments to micro and small enterprise suppliers exceed 45 days from the date of acceptance or the date of deemed acceptance of the goods or services shall have to file details of all outstanding dues to Micro or small enterprises suppliers existing on 22nd January 2019. |
30 days from the date of deployment of e-form in the MCA portal |
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2. |
Form DPT-3 |
Initial Return for disclosure of details of outstanding money or loan received by the company but not considered as deposits in terms of rule 2(1)(c) of the Companies (Acceptance of Deposits) Rules, 2014. |
22-04-2019 |
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3. |
Active Form INC -22 A |
Every company incorporated on or before the 31st December, 2017 shall file the particulars of the company and its registered office, in e-Form ACTIVE (Active Company Tagging Identities and Verification). |
25-04-2019 |
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4. |
e-form DIR 3 KYC |
Application for KYC of Directors for the year ending 31.03.2019. |
30-04-2019 |
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5. |
Form BEN 1 |
Every individual, who is an SBO in a Reporting Co. shall file Form BEN 1 within ninety days from the commencement of the SBO Rules (i.e . 8th February 2019) |
08-05-2019 |
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6. |
Form BEN 4 |
The Reporting Co. shall issue Notice to members (other than individuals) holding not less than 10% of its shares or voting rights or right to receive the dividend, seeking information about SBO. |
Not specified |
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but the maximum time limit of 90 days for an individual to furnish Form BEN 1 |
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7. |
Form BEN-2 |
Filing of e-form BEN-2 by the Reporting Co. under the Companies (Significant Beneficial Owners) Rules, 2018 (as amended by the Companies (SBO) Amendment Rules, 2019. |
30 days from the date of receipt of form BEN-1. |
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8. |
MGT-7 |
Annual filing |
In within 60 days from holding of AGM |
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9. |
AOC-4 |
Financial Statement |
In within 30days from holding of AGM |
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10. |
ADP-1
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Appoint Auditor |
Within 15days of meeting in which auditor is appointed |
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Particulars |
The tax rate for AY 2019-20 |
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Income Tax For domestic company ➲ Gross turnover is up to INR 250 crore ➲ Gross turnover exceeding INR 250 crore For Foreign company ➲ Royalty or fees earned from government or any Indian concern for technical services under an agreement concluded before ➲ Other income |
25% 30%
50%
40% |
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GST |
If company turnover is exceeding INR 20 Lakh in preceding Financial year then it is mandatory to get register into GST |
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The company falls within the ambit of the provision related to TDS deduction (to read more about it click here) |
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Customs |
The company which import or export product to a country outside India need to pay custom duty |
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Professional tax |
It is imposed by the state government, levied under Article 276 (2) of the Indian constitution, professional tax is deducted by the employer for the salaries of employees every month and remitted to state govt. |
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Categories |
Divisions (Codes) |
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Agriculture and Allied Activities |
➲Agriculture, Hunting and related Service activities ➲Forestry, logging and related Service activities ➲Fishing, Operation of fish hatcheries and fish farms; ➲Service activities incidental to fishing |
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Mining & Quarrying |
➲Mining of coal and lignite, extraction of peat ➲Extraction of crude petroleum and natural gas, service activities incidental to oil and gas extraction excluding surveying ➲Mining of uranium and thorium ores ➲Mining of metal ores ➲Other Mining and Quarrying |
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Manufacturing (Food stuffs) |
➲Manufacture of food products and beverages ➲Manufacture of tobacco products |
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Manufacturing (Textiles) |
➲Manufacture of textiles ➲Manufacture of wearing apparel, dressing and dyeing of fur |
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Manufacturing (Leather & products thereof) |
➲Tanning and dressing of leather, manufacture of luggage handbags, saddlery & harness and footwear |
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Manufacturing (Wood Products) |
➲Manufacture of wood and of products of wood and cork, except furniture; manufacture of articles of straw and plating materials |
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Manufacturing (Paper & Paper products; Publishing, printing and reproduction of recorded media) |
➲Manufacture of paper and paper products ➲Publishing, printing and reproduction of recorded media |
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Manufacturing (Metals & Chemicals, and products thereof) |
➲Manufacture of coke, refined petroleum products and nuclear fuel ➲Manufacture of chemicals and chemical products ➲Manufacture of rubber and plastic products; ➲Manufacture of other non-metallic mineral products ; ➲Manufacture of basic metals ➲Manufacture of fabricated metal products, except machinery and equipments |
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Manufacturing (Machinery & Equipments) |
➲Manufacture of machinery and equipment n.e.c ; ➲Manufacture of office, accounting and computing machinery ➲Manufacture of electrical machinery and apparatus n.e.c ; ➲Manufacture of radio, television and communication equipment and apparatus ; ➲Manufacture of medical, precision and optical instruments, watches and clocks ➲Manufacture of motor vehicles, trailers and semi-trailers ➲Manufacture of other transport equipment |
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Manufacturing (Others) |
➲Manufacture of furniture; manufacturing n.e.c ➲Recycling |
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Electricity, Gas & Water companies |
➲Electricity, gas, steam and hot water supply ➲Collection, purification and distribution of water |
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Construction |
➲Construction |
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Trading |
➲Sale, maintenance and repair of motor vehicles and motor cycles; retail sale of automotive fuel ; ➲Wholesale trade and commission trade, except of motor vehicles and motorcycles ➲Retail trade, except of motor vehicles and motorcycles, repair of personal and household goods ➲Hotels and Restaurants |
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Transport, storage and Communications |
➲Land transport; transport via pipelines ➲Water Transport ➲Air Transport ➲Supporting and auxiliary transport activities, activities of travel agencies ➲Post and telecommunications |
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Finance |
➲Financial intermediation, except insurance and pension funding ; ➲Activities auxiliary to financial intermediation |
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Insurance |
➲Insurance and pension funding, except compulsory social security |
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Real Estate and Renting |
➲Real estate activities ; ➲Renting of machinery and equipment without operator and of personal and household goods |
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Business Services |
➲Computer and related activities ➲Other Business Activities |
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Community, personal & Social Services |
➲Research and Development ➲Public Administration and Defence, compulsory social security ➲Education ➲Health and Social Work ➲Sewage and refuse disposal, sanitation and similar activities ➲Activities of membership organizations n.e.c. ➲Recreational, cultural and sporting activities ( ➲Other Service activities ➲Activities of private households as employers of ➲domestic staff; ➲Undifferentiated goods-producing activities of private households for own use ➲Undifferentiated service-producing activities of private households for own use ➲Extra territorial organizations and bodies |
Q. What is private limited company?
A. Under section 2 (68) of company act, 2013 Private company mean company incorporated under company’s act 2013 having paid-up share capital as may be prescribed, and which by its articles, —
A. Restricts the right to transfer its shares:
B. The maximum number of shareholders is restricted to 200 in case of a Private Limited Company.
The following should not be counted as shareholders of the Company:
i. a person who or was is in the employment of the company shall not be counted
ii. a shareholder who was previously in the employment of the Company shall not be counted
C. Prohibits any invitation to the public to subscribe for any securities of the company
It is a form of business which is came into existence through the Companies Act, 2013 and has separate legal entity from that of its promoter. One of the distinctive features of a Private limited is that the financial liability of a shareholder is limited to the value of their shares.
Q. Pre-requisite for incorporating a private limited company?
A. As per company act 2013 for incorporating a private limited company there is a minimum requirement of:
Minimum number of director-2
Minimum number of shareholder-2
Minimum paid-up capital- 0 (although minimum capital should be there so that bank account can be open)
Q. Documents required for incorporating company?
A. ID proof of proposed Directors and members:
i. PAN card (Mandatory)
ii. Aadhar card (Mandatory)
iii. Photograph of the proposed director (mandatory)
iv. Passport or Voter’s ID or Driving License
B. Address proof of proposed members and directors (any one of the following):
i. Telephone bill
ii. Mobile Bill
iii. Bank statement
iv. Electricity bill
C. Address proof for the principal place of business of the proposed company (any one of the following)
i. Utility bill like telephone bill, electricity bill, gas bill, water bill
ii. Rent agreement with rent slip
iii. Proof of ownership
Q. Government fees for incorporating company?
A. Government fee varies for state to state as the stamp duty varies from state to state as per state stamp act depending upon the authorized capital of the proposed company.
|
Particulars |
Private Limited Company |
Public Limited company |
Limited Liability Partnership |
|
Definition |
Private company means a company incorporated under the Companies Act, 2013 having paid-up share capital as may be prescribed, and which by its articles, —
Except in case of OPC, limits the number of its member to two hundred |
Public Limited Company is a type of Company with the following features: ➲ Is not a private company |
LLP contains elements of both ‘a corporate structure’ as well as ‘a partnership firm structure’ LLP is called a hybrid between a company and a partnership. It is a form of business which is came into existence through the LLP act 2008. It is a form of business having separate legal entity, is liable to the full extent of its assets but the liability of the partners is limited to their agreed contribution in the LLP. |
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Minimum Capital Requirement |
NO minimum capital is required |
5 Lakh |
No minimum Capital is required |
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Minimum number of members |
Minimum 2 |
Minimum 7 |
Minimum 2 designated partner/ partner |
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Minimum Number of Directors |
Minimum 2 |
Minimum 3 |
Minimum designated partner 2 |
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Compliance |
Less compliance as compare to Ltd company |
More compliance |
Less compliance |
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Name ending with |
PVT LTD (Private Limited Company) |
LTD (limited company) |
LLP |
Call or WhatsApp us on +91-99991-39391 for free consultation from our team of experts. You can also email us on reach@corpzo.com.
We share the detailed and reasonable estimated costs, documents and prerequisites for the complete process before starting the process to ensure transparency.
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Upon collecting the necessary documents and information, we waste no time in preparation and filing of your application. development on your application is brought to your attention.
On successful completion of the case we share all the relevant documents electronically and physically along with an assurance to pay you back if something is wrong.
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